Privatisation & Deregulation Flashcards
What is a Public Ownership?
This is where the government own businesses. e.g. education, healthcare.
This is different in some political views like USA and UK USA is private owned and uk public owned
Advantages of Public Ownership:
-Provides jobs which are usually protected so reduces unemployment
-Finite resources such as water and energy can be guaranteed and controlled
-Able to provide essential services to the whole country
Disadvantages of public ownership:
-Higher costs for the government which means higher taxes
-Inefficiency – public organisations are often inefficient due to diseconomies of scale
-Government and political interference may reduce efficiency of operations
What is a Privatisation of Markets?
Privatisation occurs when organizations that are owned by the public are transferred to private individuals. e.g British Gas, British Petroleum.
Advantages of Privatisation of Markets:
-Provides revenue for the government
-Can increase investment as businesses can use capital from sale of shares
-More incentives to increase efficiency therefore economic welfare is increased
-More competition brings more choice for the subject
Disadvantages of privatisation of market:
-Unemployment may result as businesses try and reduce costs
-Monopoly power may still exist
-Private sector may fail to allocate resources according to social costs and benefits
What is Regulation of Markets?
Regulation is the control of the market through rules. Many privatised companies are regulated by watchdogs. E.G OFCOM and BT
What is Deregulation of Markets?
This is the act of removing rules and restrictions in the market
What is the aim of Deregulation of Markets?
The aim of deregulation is to open up the market and increase competition or to increase contestability of markets by removing barriers to entry.
